Tens of Billions of Dollars Paid to Affected Communities in Louisiana and Mississippi, Insurance Information Institute Reports

One year after Hurricane Katrina, nearly 95 percent of homeowners insurance claims have been settled in Louisiana and Mississippi, insurance companies have paid billions in storm damage claims and the vast majority of homeowners in both states say they are satisfied with their insurance company.

The Insurance Information Institute (I.I.I.) estimates that more than 993,000 homeowners insurance claims have been settled in the two states, totaling nearly $15.5 billion. Homeowners insurers ultimately will pay more than one million homeowners claims totaling $16.4 billion from Hurricane Katrina.

In Louisiana, insurers have settled 658,700 homeowners claims or 94.8 percent of expected homeowners claims from Hurricane Katrina, totaling $10.3 billion, reported the I.I.I. In Mississippi, 334,800 or 94.3 percent of expected homeowners claims, totaling $5.2 billion, have been settled.

As the first anniversary of Hurricane Katrina approaches, nearly all homeowners and vehicle claims have been settled in Louisiana and Mississippi and nine of ten policyholders have expressed a high level of satisfaction with their insurance company," said Dr. Robert Hartwig, executive vice president and chief economist of the I.I.I. "The billions of dollars in claims settlements are playing a key role in the recovery of the Gulf Coast."

Despite the attention focused on lawsuits seeking payments for flood damage under homeowners policies where no coverage exists, the number of claims in litigation accounts for a very small percentage of the total number of claims filed," said Dr. Hartwig.

The property/casualty insurance industry will pay out an estimated $40.6 billion on some 1.7 million claims in six states for Hurricane Katrina alone. By contrast, Hurricane Andrew, the previous record-holder, resulted in $15.5 billion in losses in 1992 ($20.9 billion in today's dollars) and 790,000 claims.

Overall insured losses for damage to homes, vehicles and businesses damaged in 2005 by Hurricanes Katrina, Rita, Wilma and Dennis are estimated at $57 billion. A total of 3.3 million claims are expected.

Key Data on the Insurance Industry and Hurricane Katrina Recovery:

• Insurers have paid out nearly $15.5 billion in homeowners insurance claims to hurricane victims in Louisiana and Mississippi.
• Claims settlement rates are 94.8% in Louisiana and 94.3% in Mississippi.
• More than 80 percent of mediation claims have been resolved successfully in Mississippi and 77 percent in Louisiana.
• Estimates show that fewer than 2% of homeowners claims in Mississippi and Louisiana are in dispute either through mediation or litigation.
• One year after Katrina, nine in ten homeowners in Louisiana (89%) and Mississippi (93%) are satisfied with their homeowners insurance company.
• Four in five people (82% in Louisiana and 81% in Mississippi) who filed a hurricane-related claim are satisfied with the way it was managed by their insurer.
• Insurance company claims payments equal 11% of state income in Louisiana and 10% in Mississippi.
• Ongoing infrastructure problems and other challenges continue to impede recovery in the hardest hit areas of Louisiana, including an acute loss of population; 13,000 fewer construction workers; lagging gas, electric and public transportation services; and a significant drop in tourism.
• Another round of federal aid ($107 billion) has begun flowing into the region, which will augment the insurance industry's payments to help support further reconstruction.

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